The first article by Mike Wilson posted at Jo Nova deals with energy economics and why it’s a myth that Australian is a high energy intensity nation.
Aussie Pete submitted a post involving 2 detailed articles that really needed separate treatment…..
So I have attempted to do so …sorry for the problems of continuity….. the editor
These two articles need to be read together as they both deal with the same issue from different perspectives.
Australia’s Invisible Energy Trade: better than most and getting even better
It’s part of the spin game that almost every statistic is spun-into-oblivion, and here, thanks to Mike Wilson, is the analysis of why “per capita” statistics are meaningless.
Ross Garnaut (and dozens of others) claim Australia has a high emissions intensity of energy use. Yet Mike Wilson shows below that Australia’s energy intensity is not just declining, it’s below the world average, and below Canada, South Africa, China and the US.
The Garnaut Review:
“Relative to other OECD countries, Australia’s high emissions are mainly the result of the high emissions intensity of energy use, rather than the high energy intensity of the economy or exceptionally high per capita income. Transport emissions are not dissimilar to those of other developed countries. Australia’s per capita agricultural emissions are among the highest in the world, especially because of the large numbers of sheep and cattle.
The high emissions intensity of energy use in Australia is mainly the result of our reliance on coal for electricity. The difference between Australia and other countries is a recent phenomenon: the average emissions intensity of primary energy supply for Australia and the OECD was similar in 1971.” — Garnaut Climate Change Review
Mike Wilson has found the statistics that expose the myth that Australian is a high energy intensity nation. We may use a lot of energy, but we produce a lot of goods, our intensity of energy use is lower than most. Garnaut and others quote figures “per capita”, but that’s misleading if the nation in question has a small population that produces a lot of goods for the rest of the world, and especially so if those particular items are high energy creations.
Australia’s GDP is growing faster than our energy use, so even though our energy use has doubled since the mid 1970′s, Australia is using that energy more efficiently and producing more with it. Compared with the rest of the world Australia is doing very well. China may run at a low energy use “per capita”, but it’s energy use is not as effective as ours. In other words, if we push high energy manufacturing into China, it will use more energy to get the same product, and so produce more greenhouse gas in the process. At the moment China uses three or four times as much energy as Australia does when compared on a GDP basis. — JN
Australia’s Invisible Energy Trade
Guest Post by Mike Wilson (aka Bulldust)
There are three reasons that claims that Australia is a massive per capita consumer of energy, are irrelevant.
- below average energy consumers on an energy intensity basis (i.e. energy used to generate GDP);
- massive net exporters of energy goods; and
- massive net exporters of energy embodied in non-energy goods.
- Australia produces largely energy intensive goods for export, and therefore taxing the energy sources makes our domestic producers less competitive on the world market. The inevitable result is that multinational companies will go offshore for energy intensive projects.
- Australia is not the end user of much of the energy she consumes … much of it is destined for overseas consumers. The moral imperative for “carbon” taxation is therefore largely misplaced. If there were no overseas demand for our energy intensive goods we would not be consuming the associated energy in the first place which created the emissions
Australia’s Total Energy Intensity has been declining since the 1970′s.
People keep carping on about Australia being a high consumer of energy on a per capita basis. Well here’s Australia’s energy IU plotted against a selection of other countries:
It is a tad difficult to make out the trends when China dominates the graphic (note the downward trend in China’s energy IU mentioned earlier). So here is a scaled up version of the same graph without the Chinese trend line:
That puts things in perspective, no? We are below average, and I mean that in the best possible way … compared to the average for all the countries. So, not only are we below average when it comes to energy consumption relative to GDP generation, but much of that energy ends up going overseas, as demonstrated previously. (If that doesn’t dispel the myth that we are intensive energy consumers in Australia, I have no idea what will.)
Australia exports Energy
Australia’s trade is going gangbusters. Australia exported merchandise (does not include services) to the tune of $231 billion in 2010, over $102 billion of which came from WA. On the flipside Australia imported $210 billion, while WA only imported $26 billion. If it wasn’t for WA we’d be running a massive trade deficit in Australia, instead we have a decent-sized trade surplus.
But what is it Australia sends overseas, and what is it we import? We export predominantly ores, metal, energy fuels and agricultural goods (iron ore $49b, coal $43b, gold $14b, petroleum $10b, natural gas $9b, etc). We import mostly highly manufactured items, with petroleum being the main exception (petroleum $16b, cars $16b, petroleum oils $10b, medicaments $8b, telecoms equipment $8b, gold $7b etc).
Now the key question … how much energy is embodied in the exports and imports from Australia? It becomes clear, after looking at the disaggregated manufacturing industry graphs that Australia predominantly exports energy intensive goods, but imports predominantly goods that are less energy intensive. In other words we send a lot of energy overseas congealed into other forms such as aluminium metal, copper, LNG etc. The amount we get back in highly manufactured goods is dwarfed by the amounts we send out.
The policy relevance
Australia a massive net exporter of energy products, but we are also a massive net energy exporter in terms of energy embodied in other goods (primarily metals and petroleum products). So when politicians seek to penalize us for our energy consumption, you must first have them stare these facts in the face and admit that much of this energy consumption is by proxy for consumers in other countries … not so much for our benefit.
I would highly recommend reading Tony Abbott’s piece in The Australian as he touches on many of the points I have covered.
The full PDF Report: Australia’s Invisible Energy Trade.
(The report also has a breakdown of the different manufacturing sectors and their energy use. Yes, mining and metal products use a lot of energy).